Interest Rate: The Last Six Months
Of Federal Activity

About

This Report

This is a computer-generated report that shows all of the federal activity with respect to the keyword "Interest Rate" over the last six months. This is a demonstration of the power of our government relations automation software.

Hansard

House: 31 Speeches
Senate: 18 Speeches

House Senate

Bills

Active: 1

See Bills

Regulations

Filed: 1
Proposed: 0

Regulations

The House

Mr. Alexandre Boulerice (Rosemont—La Petite-Patrie, NDP)

June 5th
Hansard Link

Government Orders

“...berals' campaign platform. The Liberals said it was a good time to invest in infrastructure because interest rates were low. They were right. Governments can borrow money at lower rates than anyone else because their annual revenue is more stable than anyone else's. That is what they told us. What they did not tell us, however, is that they would get their Bay Street friends in on the investment act and guarantee them certain returns, certain profits at the expense of the people who are going to use the infrastructure. That is the part they did not mention. That was the nasty surprise we got when the Liberals took over. As everyone knows, it was not the only one.

The trick to how the infrastructure investment bank works is kind of like how PPPs work. When a government borrows money at low interest rates, that is good for the people, but it shows up on the books and counts as an official ...”

Mrs. Cheryl Gallant (Renfrew—Nipissing—Pembroke, CPC)

June 5th
Hansard Link

Government Orders

“...e building. Roads were built, bridges were built, community centres were built, all on the basis of interest rates that were just above zero.

I would like to know whether the member could compar...”

Matthew Dubé (NDP)

May 11th
Hansard Link

Business of Supply

“...here.

What we heard during the last election campaign was a proposal to take advantage of low interest rates to help municipalities and the provinces to capitalize on that reality and invest pub...”

Alain Rayes (Conservative)

May 11th
Hansard Link

Business of Supply

“...d to go looking for financing, because we all have access to funding through municipal bonds, at an interest rate of less than 2%, and the federal government and the provinces are also able to do this...”

Richard Cannings (NDP)

May 11th
Hansard Link

Business of Supply

“...of British Columbia found that provincial taxpayers were on the hook for about $31 million in extra interest rates on one project alone, the Fort St. John Hospital, representing the private equity in the project borrowed at an interest rate of 14.79%. This led one journalist to wonder if the B.C. Liberals had put the charge o...”

Richard Cannings (NDP)

May 11th
Hansard Link

Business of Supply

“...al way government does business, through the government providing monies that it could get with low interest rates if it needed to borrow. It has nothing to do with a Canada infrastructure bank that i...”

Elizabeth May (Green Party)

May 11th
Hansard Link

Business of Supply

“...ole for infrastructure and the infrastructure bank if its purpose is to access financing at a lower interest rate than that available, even in municipalities. This is a valid purpose. My concern is th...”

Sean Fraser (Liberal)

May 11th
Hansard Link

Business of Supply

“...ing such serious and substantial investments. Right now we live in a time that has historically low interest rates. Money has never been cheaper in the history of currency. At the same time, we are co...”

Robert Aubin (NDP)

May 11th
Hansard Link

Business of Supply

“... have to admit that it made sense at the time. The Liberals also said that in light of the very low interest rates at the time, they would take advantage and run up a small deficit. I think that Canadians bought into that. The proof is that the Liberals are in government. Let us take advantage and invest in the infrastructure needs of voters while interest rates are at their lowest because it will cost less for all Canadians. The principle is easily understood.

Now, they are introducing an infrastructure bank that does the exact opposite. Instead of taking advantage of low interest rates, the Liberals are going to hand it over to the private sector, which only has one obj...”

Mike Lake (Conservative)

May 5th
Hansard Link

Government Orders

“...ears over that course of time. The results of those deficits, of course, in the mid-1980s were that interest rates were so high in Canada and employment was a challenge in Canada. If we look at the re...”

Dan Albas (Conservative)

May 4th
Hansard Link

Government Orders

“...e small people, but it is worse than that. The ones who are going to be charging prohibitively high interest rates so that they can get the return are going to be these high finance international fina...”

Angelo Iacono (Liberal)

May 4th
Hansard Link

Government Orders

“...res for families, innovation, efficiency, and infrastructure. By making major investments now while interest rates are low, we can build a solid foundation for a prosperous, green future full of possi...”

Alexandre Boulerice (NDP)

May 4th
Hansard Link

Government Orders

“... being created. The Liberals said during the election campaign, and are still repeating today, that interest rates are low, so it is a good time to borrow to invest, and that we need new infrastructur...”

Alexandre Boulerice (NDP)

May 3rd
Hansard Link

Government Orders

“...gn, the Liberal Party kept saying, and rightly so, that it was a good time to borrow money, because interest rates were low.

What the Liberals never told us, however, was that two-thirds of the money used to pay for our infrastructure would come from private investors, who would ask for rates of return from around 7% to 9%, even for public infrastructure.

Why did the minister change the Liberal Party's strategy? Why was it talking about borrowing money at the low interest rate of 2% if it now intends to fill its friends' pockets, on the backs of taxpayers, with ...”

Bill Morneau (Liberal)

May 3rd
Hansard Link

Government Orders

“...simple.

In addition, we believe that it is very important to do more with our investments. If interest rates are very low, then it is a good idea to include pension funds and institutional funds in our investments. We are sure to find an interest rate that is much lower than those cited by the hon. members. That will be our plan. We wil...”

Alexandre Boulerice (NDP)

May 3rd
Hansard Link

Privilege

“... we were experiencing a deficit in infrastructure in our country, and we agreed. They said that the interest rates were so low that this was time for the government to get some money from the market at 2% interest, which is a really low rate, and to take the opportunity to invest in our communities and build new infrastructure. It looks good and seems logical.

However, the big player in this bank will be the private sector, which is there to make profits, to make money, not to serve the public. Instead of borrowing at 2%, we will have private investors asking for profits of 7%, 8%, 9% per year. It will be the taxpayers who will pay for that. Infrastructure will cost more at the end. Also, during that time, we can expect a lot of new fees in order to drive on a highway, or to go to the airport, or to cross a bridge, if the airports are still public, which we are not quite sure of right now. The government will probably sell the airports to start its bank. (1655) [Translation]

One aspect of this budget implementation bill that worries us is the creation of the infrastructure investment bank. During the election campaign, the Liberals talked about an infrastructure deficit and said that investments were needed. We agreed. Interest rates were low, so it was a good time to borrow and it would not be too costly for the gove...”

Pierre Poilievre (Conservative)

May 2nd
Hansard Link

Oral Questions

“...lated how much taxpayers could lose if a market correction causes home prices to go down, or higher interest rates cause mortgage defaults to go up?”

Joël Godin (Conservative)

April 4th
Hansard Link

The Budget

“... that budgets balance themselves. Better yet, he said it was the right time to borrow money because interest rates were low. He is not wrong, but what are we going to do when the interest rates go up? There is no money left. We have our Prime Minister to thank for that.

Th...”

Gérard Deltell (Conservative)

March 23rd
Hansard Link

The Budget

“...g budget, that “the federal debt is out of control” and that we are lucky we currently have low interest rates. However, sooner or later, interest rates are likely to rise and each percentage point increase means an extra $6 billion or $7...”

Dave Van Kesteren (Conservative)

March 23rd
Hansard Link

The Budget

“... is not only adding but adding at an alarming rate. The fact is that today we have historically low interest rates. We know that these rates will not continue. As a matter of fact, they are manipulated. Therefore, I wonder if he could expound, and he did that to some degree, and give a really clear picture to this House, and especially to the Liberal government, of just how critical that is and what that would mean if the interest rate were to rise by one point, let alone two or three.”

Alexandre Boulerice (NDP)

March 21st
Hansard Link

Business of Supply

“...hetoric during the election campaign. They said it was time to invest in our infrastructure because interest rates were low. They ranged from about 2% to 2.5%. It does not cost much to borrow money to...”

Pierre Nantel (NDP)

March 21st
Hansard Link

Business of Supply

“...day's topic. The government says it plans to borrow money for major infrastructure projects because interest rates are so low, but it is approaching lenders that want returns on the order of 7%, 8%, o...”

Pierre Poilievre (Conservative)

March 9th
Hansard Link

Oral Questions

“...d in modern times,” with a 12% increase in spending over this period. It goes on to say:

If interest rates increase or economic growth further weakens relative to planning assumptions, young p...”

Pierre-Luc Dusseault (NDP)

March 7th
Hansard Link

Business of Supply

“...with them, they typically negotiate deals to pay back the money they owe to society at preferential interest rates while avoiding penalties and fines that could, at the very least, serve as a warning ...”

Pat Kelly (Conservative)

March 7th
Hansard Link

Adjournment Proceedings

“... would have heard from many witnesses that the new rules will reduce competition, leading to higher interest rates and fewer options for Canadian consumers.

He would have heard from Michael Lloy...”

Pat Kelly (Conservative)

March 7th
Hansard Link

Adjournment Proceedings

“...he same government that is running an absolutely out of control deficit, has in this House used low interest rates as a justification for doing so, and is lecturing homebuyers about the risks of credi...”

Dan Albas (Conservative)

February 13th
Hansard Link

Private Members' Business

“...ailable to flow into other sectors of the local community lending portfolio. In turn, it means that interest rates will need to be higher. (1125)

All of this drives up costs on a credit union a...”

Robert Aubin (NDP)

February 13th
Hansard Link

Private Members' Business

“..., and wealthy families. The working class only had access to loan sharks, which charged prohibitive interest rates. To address this injustice, Alphonse Desjardins created a system where the working cl...”

Dan Albas (Conservative)

February 9th
Hansard Link

Oral Questions

“...for those who want to refinance their homes. These changes have resulted in Canadians paying higher interest rates when refinancing their mortgage. These changes were imposed with zero consultation.

Why are the Liberals hurting struggling Canadian homeowners by hiking their interest rates?”

Guy Caron (NDP)

February 6th
Hansard Link

Private Members' Business

“...dren increasingly are incorporated, since incorporation carries several advantages, including lower interest rates when they borrow and less tax on the amount to be paid to the parents.

I know t...”

Dan Albas (Conservative)

February 3rd
Hansard Link

Statements by Members

“...cess their equity, the costs of doing that are going to greatly increase as a result of much higher interest rates.

At committee we heard that Canadians refinance for many reasons: to invest in ...”


The Senate

Some Hon. Senators

June 21st
Hansard Link

Budget Implementation Bill, 2017, No. 1 Third Reading

“...st. Your child earns, say, $75,000 or $80,000. We are now hearing that the Americans will put their interest rate up to 1 or 1.25 per cent and that there will be further increases in the U.S. interest rate. What does do that the Canadian interest rate? If we go back to the prime lending scheme in the past in the States, for example there was a person in Baltimore earning $20,000 a year. He had a house worth $300,000 with a $200,000 mortgage at 2 per cent. When they doubled the interest rate to 4 per cent, he went bankrupt. Why? It's because people with easy money rates can bo...”

Hon. Larry W. Smith (Leader of the Opposition)

June 21st
Hansard Link

Finance Government Spending

“... response is to raise rates, effectively tightening supply. For those living off a trust fund, high interest rates are positive; but for the average hard-working Canadian with a mortgage or business loan to pay, high rates of interest cause concern.

The PBO estimates that if the Bank of Canada were to raise key interest rates from the current 0.5 per cent to 3 per cent, the average Canadian family would have to use 16.3 per cent of its disposable income for debt repayments by the end of 2021. As mentioned in my speech earlier, the CMHC, Moody's and other major organizations are concerned about the dangerous level of mortgage debt in markets like Toronto and Vancouver.

Given that we are heading toward massive deficits and higher interest rates and currently facing instability in the housing markets of several cities, what will ...”

Hon. Peter Harder (Government Representative in the Senate)

June 21st
Hansard Link

Finance Government Spending

“...frastructure are necessary for preparing the Canadian economy for the future.

With respect to interest rates, I would also suggest that our interest rates are at historic lows, and that is unsustainable over the long term of the economic cycle. However, the government believes that the risk of explosive interest rate growth is not in the foreseeable future, although some flexibility in interest rates does take place, as the honourable senator will know.

With respect to the housing market, the government has undertaken a number of measures, particularly through CMHC, to better prepare consumers for the challenge of a changing economic and interest rate environment and is also working in particular markets, particularly Toronto and Vancou...”

Senator Smith

June 21st
Hansard Link

Finance Government Spending

“... level. Once you get into one and half or one and three quarters of your base amount, even at a low interest rate, it can be very difficult for the average Canadian family.

This leads to our gre...”

Senator Mockler

June 20th
Hansard Link

The Estimates, 2017-18 Main Estimates—Sixteenth Report of National Finance Committee Adopted

“...ittee is very concerned that if a significant downturn in the job market or even small increases in interest rates were to happen, it could potentially hit the government's purse very hard, thus causi...”

Hon. Elizabeth Marshall

June 20th
Hansard Link

The Estimates, 2017-18 Main Estimates—Sixteenth Report of National Finance Committee Adopted

“...nt increased stress testing standards to ensure people could still afford their mortgages at higher interest rates than they are currently paying. In addition, lenders can no longer insure mortgages on homes with a purchase price over $1 million, nor can they insure mortgages on homes purchased for rental or as investments.

Although CMHC has said that total insured volumes fell 41 per cent in the first quarter of 2017, Finance officials, when testifying at the National Finance Committee, said it was too early to determine the impact of the new rules.

Concerns are also being expressed about increasing consumer debt, including mortgage credit, which has been growing faster than disposable income. Inherent in this is the risk associated with record low interest rates and individuals' ability to cope with an increase in interest rates, which many economists say is imminent. In addition, premiums for mortgage insurance were increased in March of this year after new rules were implemented requiring mortgage insurers to have more capital on hand as a hedge against potential losses.

CMHC, the Crown corporation, provides mortgage insurance and is, in fact, the provider of the majority of mortgage insurance. Canada Guaranty and Genworth also provide mortgage insurance. They are regulated by the Office of the Superintendent of Financial Institutions and were also required to increase their premiums.

Last month, the Finance Committee met with officials of Moody's Investors Service, the International Monetary Fund, the Office of the Superintendent of Financial Institutions, the Department of Finance and CMHC to discuss the housing market and whether it could impact the government's fiscal framework. Moody's downgraded the credit rating of Canada's six largest banks on May 10, citing concerns that expanding levels of private sector debt could weaken asset quality in the future.

Moody's further elaborated by stating that:

Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.

An official of the International Monetary Fund testified on May 30 when they were in Ottawa for their annual consultation process. At that time, we were informed that, during consultations, the housing market had come up as an important issue for the Canadian economy, citing the problems at Home Capital, house prices in Toronto and Vancouver, the ratings' downgrade by Moody's, the high level of household debt and the exposure of the banks to the housing sector. We were informed, for example, that mortgage lending alone accounts for 45 percent of the banks' total loans. Of particular interest were comments regarding the government, that a significant portion of mortgages are backed by the full faith of the government.

CMHC also discussed the consultations currently being undertaken by the Department of Finance on lender risk- sharing for government-backed insured mortgages. CMHC officials also testified regarding the corporation's mandate and programs, as well as the government-backed mortgage insurance, which currently stand at $500 billion.

CMHC informed us of their stress-testing program, which is designed to understand the impacts of changes in the economy as well as other types of circumstances that could impact CMHC. Officials informed us that they try to tailor the stress scenarios to the actual reality of the market. For example, last year they looked at a U.S.-style housing correction, which is a 5 per cent increase in unemployment and 30 per cent decrease in house prices. This year they are looking at a more severe house price decline because house prices have continued to elevate.

CMHC officials informed us that, in addition to the programs provided by the corporation, they are a stabilizer when the economy is under stress. For example, in 2008 and 2009, when the private mortgage insurers were under stress and reduced their participation in the market, CMHC indicated that they had helped keep the housing market going and ensured stability in that sector.

In concluding their testimony, CMHC officials informed us of the following. This is a quote from their testimony because I wanted to convey to senators the assurances that we were given by CMHC:

Recent developments, including Home Capital and the downgrading of Canada's big six banks by Moody's Investors Service, has caused some to question the stability of Canada's housing finance system. Moody's is a respected credit rating agency and its opinion matters to market participants. Notably, Moody's has cited high levels of household debt and elevated house prices as key reasons for the downgrading. . ., This is consistent with CMHC's analysis of market conditions.

Having said that, CMHC is not concerned about the state of our financial exposure and we remain confident in Canada's housing finance system in general. Canada's banks have consistently been rated among the strongest in the world. Moreover, CMHC's latest stress testing results demonstrate that the corporation has sufficient capital to withstand severely disruptive economic conditions.

This is not the first time Canada's big six banks have been downgraded, but it does provide a note of caution that we need to remain vigilant against risks that could jeopardize the stability of Canada's financial system.

Last week, the Bank of Canada said that the high levels of household debt and red-hot housing markets pose the biggest threat to the stability of the country's financial system. Mortgages and home equity lines of credit make up about 90 per cent of Canada's household debt, and the Bank of Canada has previously said that it is concerned that mortgage credit is growing faster than disposable income.

Other than Vancouver and Toronto, price increases have been moderate, but the areas where housing has been growing the fastest make up about half the value of Canada's housing stock and about one third of the population. As a result, the housing situation in Vancouver and Toronto could have an impact across the country.

The Standing Senate Committee on National Finance held four meetings on the Main Estimates and we heard from 21 witnesses from eight organizations.

As I have already mentioned, a number of departments and agencies indicated that most of the initiatives outlined in the budget are not included in the Main Estimates, as the Main Estimates are prepared before the budget is released.

Officials from Health Canada indicated that increased funding has been provided for a number of programs, including an increase of $440 million for First Nations and Inuit health programs. Officials discussed health and social services provided to First Nations children living on reserves, the Indian Residential Schools Settlement Agreement, funding for mental wellness programs, as well as funding to assist First Nations communities with access to safe, reliable water and waste water services.

Canadian Heritage officials discussed a number of initiatives including the Canada 150 Fund established to celebrate the one hundred and fiftieth anniversary of Confederation to support numerous community and national activities. Officials also discussed a number of budget initiatives for which funding will be requested through Supplementary Estimates.

CMHC's funding of $2.7 billion in the Main Estimates reflects a budgetary increase of $700 million, of which $576 million is for social infrastructure. CMHC officials also discussed their budget allocation of $30 million for market research and analysis, including insights into housing markets that are overheated and information on escalating housing prices. They indicated they are expanding their surveys to provide more timely and more accurate information on the housing market.

(1630)

This issue of the housing and consumer debt has been ongoing for the past year, and we've been very concerned about it. Even within the last day, there have been at least three articles on housing, interest rates and debt. There's one here from yesterday where Canada's Finance Minister, Bill Morneau, said he discussed with his provincial counterparts whether more actions are needed to ensure the stability of the country's housing market.

There was also an article where the Bank of Canada raised with sudden urgency a July rate hike in Canada. It looks like the interest rates increase is very imminent. Some people are really borderline with regard to managing their debt.

There's another one. The Parliamentary Budget Officer just released a report today where he's saying that Canadians will have to devote an unprecedented amount of their income to debt repayments as interest rates return to normal levels.

So the housing and interest situations are really conc...”

Hon. Anne C. Cools

June 20th
Hansard Link

Appropriation Bill No. 2, 2017-18 Second Reading—Debate Suspended

“...erage household debt was slightly under 100%. One of the main reasons for this higher level is that interest rates have decreased, making debt more affordable.

Honourable senators, ...”

Senator Mockler

June 20th
Hansard Link

Budget Implementation Bill, 2017, No. 1 Eighteenth Report of National Finance Committee Presented

“...cer released a report that said household debt-servicing capacity will be stretched even further as interest rates rise to more normal levels.

Now we hear, in yet another report today, that the Governor of the Bank of Canada may hike interest rates in a few short weeks.

Let me tell you, honourable senators, when I sit down for...”

Hon. Larry W. Smith (Leader of the Opposition)

June 14th
Hansard Link

Finance Economic Growth—Housing Market

“...umes of an overheated housing market and a continuing debate over the possibility of an increase in interest rates.

Last Thursday the Bank of Canada released its semi-annual financial system rev...”

Senator Smith

June 14th
Hansard Link

Finance Economic Growth—Housing Market

“...come ratio, which is very serious.

The Americans are indicating that they will increase their interest rates in the next three to six months. In our country, what would happen with an impact of a 1 per cent hike in interest rates to consumers that are so heavily indebted?

I recognize the good economic news y...”

Hon. Elizabeth Marshall

June 13th
Hansard Link

Budget Implementation Bill, 2017, No. 1 Second Reading—Debate Adjourned

“...interest on its borrowings, and for the past number of years, government has borrowed at record low interest rates.

However, higher interest rates are anticipated in the very near future; so with interest rates that are higher and additional debt as a result of the deficits, government's public ...”

Hon. Larry W. Smith (Leader of the Opposition)

May 30th
Hansard Link

The Conservative Party of Canada Election of Andrew Sheer as Leader

“...n. Spending money you don't have also creates inflation, and I'm sure many of you remember the high interest rates that followed Pierre Trudeau's years. It is the middle class that suffer; the middle class lose their homes because interest rates on mortgages become too high to afford.

Andrew Scheer stated his priorities as ...”

Hon. Pierrette Ringuette

May 16th
Hansard Link

Criminal Code Bill to Amend—Second Reading—Debate Adjourned

“moved second reading of Bill S-237, An Act to amend the Criminal Code (criminal interest rate).

She said: Honourable senators, today we are beginning second reading of Bill S-237, which amends section 347 of the Criminal Code. I wish to remind my colleagues that this is in fact the third time that I have introduced this bill. In the recent past, the Conservative government leaders in this place used the Senate rules to avoid passing this bill.

Section 347 of the Criminal Code sets an annual criminal interest rate of 60 per cent for all transactions. My bill, Bill S-237, reduces that rate to 20 per cent above the Bank of Canada's rate, which is currently 0.5 per cent. The new criminal interest rate of 20 per cent plus the 0.5 per cent Bank of Canada rate will apply to credit advanced for certain purposes, such as personal, family and household purposes, as well as not-for-profit organizations.

[English]

In addition, the bill recognizes the need for flexibility for loans for businesses and commercial purposes. Let me elaborate on the business and commercial loans aspect of the bill.

In developing this bill and during our debate last Parliament, it seemed clear that for small business loans, those under $1 million, that the system is working pretty well and there is no need to change the rate of 60 per cent. This allows businesses some flexibility in negotiating short-term loans while maintaining reasonable protection for small businesses.

There was some discussion about lowering the ceiling for small business loans, and I am open to debating this issue during the committee process.

For loans of over $1 million, large business loans, our research and discussions with stakeholders led us to the conclusion that larger entities have the ability to fully negotiate appropriate financing for their needs and that eliminating the cap of 60 per cent would provide more freedom for loans requiring high interest rates, such as bridge loans.

Jennifer Babe of the Uniform Law Conference of Canada, who appeared before the Banking Committee on May 6, 2015, said that "Having the million-dollar cap in is beneficial to businesses."

I'll give a brief refresher for the chamber on the history of the interest rate caps in Canada leading up to the establishment of the "Criminal Interest Rate," section 347. It goes back to 1906. It was the Money-Lenders Act, with 12 per cent on loans of $500 or less.

Jump to 1939, 33 years later, and it was replaced with the Small Loans Act, with loans of $500 or more. Then it was increased to $1,500, where limited, with an interest rate of 1 per cent a month. If they wanted to charge more than that, they had to apply to the federal government for a licence for each loan.

Jump again to 1981, the year that section 347 was enshrined in the Criminal Code with a rate of 60 per cent, and this has stood as the law for 36 years. So it's long overdue to be reviewed.

Records related to discussions around the setting of that rate are unavailable, but we can assume that they had their reasons at that specific time. For instance, in the 1980s, the Bank of Canada rate was 21 per cent. The criminal rate was set at three times that percentage. Today the Bank of Canada rate — that is, the overnight rate — is half a per cent. That would mean that the criminal interest rate would be, in relation, 1.5 per cent, given the same relation as in 1981.

Now, I'm not advocating a rate of 1.5 per cent. Even my skeptical mind can believe that you can't give out loans at that rate. I'd love that, but it's kind of mission impossible.

I'm advocating for a reasonable rate of 20 per cent above the bank rate, so currently it would stand at 20.5 per cent. That would be the criminal interest rate in the Criminal Code of Canada.

By tying this rate to that of the bank rate, the criminal interest rate would be flexible to the changing economy and monetary policy.

One of the criticisms of this bill is that the Criminal Code is the wrong place to seek remedy on unreasonable interest rates. I would respond, firstly, by stating that this is where it is in the law. I do not wish to overhaul our system of law but just to make the limits more reasonable.

Secondly, on the matter of criminalization of loans, I shall refer to the comments again of Jennifer Babe of the Uniform Law Conference of Canada. She noted that the Crown uses section 346 to go after extortion and said, "The Criminal Code, in 347, triggers civil litigation where parties to contracts declare that portions of their contracts are illegal and, therefore, not enforceable."

Of the Supreme Court cases involving section 347, they all refer to contract law. In its three decisions in the last 10 years on section 347, none were about crime but about contract enforcement.

Bill S-237's changes to section 347 are not about criminalizing loans but to reign in outrageous interest rates.

I want to take a brief moment to address payday loans. In 2006, there was a carve-out for a specific financial instrument, that is to say, a loan of $1,500 or less for a term of 62 days or less. That was the only financial instrument or product, should I say, that was carved out of the Criminal Code if the provinces wanted to be licensed to regulate payday loans in their province. Therefore, any other loan outside of that specific financial product is subject to the 60 per cent interest rate within the Criminal Code.

This bill will not change those specific financial instruments or the related provincial regulations. I have issues with that, but that is another discussion for probably another day.

Why do we need to reign in interest rates? The first question is this: Do we, the federal government, have the authority and responsibility to regulate interest rates? Clearly that has been the position of previous governments for over 100 years, considering the history of the criminal interest rate within our statutes as mentioned earlier.

Including the payday loans issue in 2006, it is clearly the case that the federal government, Parliament, has authority over interest rates in general given that payday loans required and were given a very specific carve-out from the Criminal Code, but every other interest rate remains under the federal Criminal Code.

(1450)

Now let us look at the Constitution under the heading of "Legislative Authority of Parliament of Canada." Section 91 of the Constitution Act lays out the legislative powers of the federal government, Parliament, and at No. 19 you will see the issue of "Interest." I would also point out that the list includes No. 15, "Banking," and No. 14, "Currency."

Visa — the credit card company — documents and representatives have referred to credit cards as digital currency. Tim Wilson, head of Visa Canada at the time, said in an op-ed for The Globe and Mail on March 1, 2010:

These cards - or digital currency - have made our lives better - not just by making transactions smoother, but by prying open whole vistas of economic opportunity.

One has to wonder who profits from this huge vista of economic opportunity.

Credit cards are being used more and more. As noted, they are becoming a digital currency. As our economy is more entangled with credit cards, we have increasing credit card debt. This is the trend that should concern us.

In 2016, 89 per cent of Canadian adults had at least one card, with an average of 2.2 cards per Canadian. The total number of cards has gone down, but spending and transaction volume has continuously gone up.

In 2015, according to the Canadian Bankers Association, net dollar volume for Visa and MasterCard reached $421 billion, and that is for one calendar year. It was a 5.5 per cent increase from the previous year, and over the last five years it was a 36 per cent increase.

Transactions processed have increased to 3.9 billion, a 6.5 per cent increase from the previous year and a 45 per cent increase over five years.

But we are not just talking about credit cards. Bill S-237 applies to all loans for individuals, households and non-profit organizations.

We have seen many stories over the years about extremely high interest rates, with the proliferation of instalment loans and line-of-credit-type products with very high rates. These financial products are not within the scope of provincial regulations. They are under the scope of the Parliament of Canada, and they are under the Criminal Code.

For example, a retired farmer in Manitoba took out a $100 loan for 13 days. He had to pay $133.18. That is a 925 per cent interest rate. The payday loan limit in Manitoba would have been $17. There was a class-action lawsuit against this particular company in Manitoba and in Ontario, where it operates, and it took four years to settle.

The Toronto Star reported last year a company offering caregiver loans that resulted in effective interest rates of over 200 per cent.

Another example that recently caught the eye of the Financial Consumer Agency of Canada is secured loans offered by credit repair companies. They call your house. They say, "If you have credit card debt, we can help you." I know. I got the call at my house. These are offered under the guise of rebuilding credit, but according to a Global news report, fees and interest reached 50 per cent. This case falls under the current limit of 60 per cent.

Even if we're outraged about that 50 per cent interest rate, we can't do anything because the Criminal Code says it's okay up to 60 per cent. But at 60 per cent, then it becomes criminal; so you can charge 59.999.

Should someone who has to rebuild their credit have to pay a 50 per cent interest rate?

By lowering the criminal interest rate, we can send a strong message that profiteering off the financially vulnerable of our society will not be tolerated.

Annualized interest rates charged by phone and cable companies are often in excess of 42 per cent. For example, I have seen Bell charge 3 per cent a month, which is 42.5 per cent annually, and Rogers charge 2 per cent a month, which is 26.8 per cent annually.

Now some may be worried about the bottom line of financial institutions, so let's look at bank profits in the last quarter.

RBC, per quarter, not on the year, $3 billion, up by 24 per cent from the previous year; Scotiabank, $2 billion, up 10 per cent; BMO, $1.5 billion, up 39 per cent; CIBC, $1.4 billion, up 43 per cent; National Bank, $500 million, up 90 per cent, but it includes an equity interest writeoff of the previous year.

I don't foresee a dismantling of our financial system if we limit interest rates to a reasonable amount.

As I stated before, the Bank of Canada rate has fallen drastically over the years, but the interest rates charged on credit cards, utility bills and other loans have remained largely stagnant and even increased.

While Canadian financial institutions substantially increase their profits year after year, Canadians' debt is at an all-time high. The household debt-to-income ratio is $169.4, a 23 per cent increase from 10 years ago.

Non-mortgage debt for Canadian households in 2016 was $21,912, an increase of 2.18 per cent over the previous year.

Credit card debt per borrower is $4,094, a 2.3 per cent increase from the previous year. There was also an increase in the delinquency rate, non-payment over 90 days, to 4.2 per cent, an increase of 3.2 per cent over the previous year.

Consumer debt levels in Canada are so high that, along with record housing prices, Moody's downgraded the credit rating of Canada's big six banks just last week.

Placing reasonable limits on interest rates is not a novel idea. Our capitalist neighbours to the south have limits in 18 states. Many include variable rates based on the Federal Reserve rate of the T-bill, with maximums generally in the mid-teens to the low twenties. But some go further. For instance, Minnesota has one of the tightest usury laws in the country, with a limit of 8 per cent. Over 15 states hit below the rate prescribed in my bill.

(1500)

I am sure every one of you has heard stories from family and constituents about the struggles with debt that everyday Canadians face.

At issue here, I believe, is the problem of the debt cycle. The highest rates are reserved for those who can least pay them, and so they go further and further into debt and are further unable to pay. Sometimes people are hit with unexpected expenses or life situations and have to take out loans out of necessity.

These are not all cases of people living beyond their means, but people suffering hardship, and we let businesses charge excess interest on that hardship.

A very recent survey by accounting firm MNP showed that more than half of Canadians are $200 away from being unable to pay their bills and debts. For 10 per cent, it's less than $100. That's a very small margin of error. This is not being unable to buy a bigger TV, like some would say, but paying necessary expenses. Something goes wrong with the transmission in your car, and you have to get a loan; a leaky roof, a loan; a sick child, a loan to buy prescription drugs. Things can happen to any of us. Then they are in more debt, and the debt spiral begins.

[Translation]

Unfortunately, too many companies only target clients in this type of financial situation. Some of you may be wondering why we should dwell on these people who are so far in debt. My response is that it is clear that debt has an adverse effect on our economy, an impact on our common financial stability. This was clear last week when Moody's downgraded the credit ratings of our Canadian banks.

Furthermore, when someone can't pay for basic necessities such as food, housing, and so forth, taxpayers end up footing the bill through various social programs.

[English]

Unfortunately, many companies are specifically in the business of targeting those in this situation. At the end of the day, we are all vulnerable to the effects of high interest rates.

It is time to limit the interest companies' charge to what should be reasonabl...”

Hon. Elizabeth Marshall

May 11th
Hansard Link

Families, Children and Social Development Canada Mortgage and Housing Corporation

“...We have known for a while that household debt is at an all-time high and is increasing. Interest rates are low, encouraging people to borrow. In fact, the government itself is addicted to low interest rates as evidenced by their large deficits. We also have the situation at Home Capital Grou...”

Hon. Elizabeth (Beth) Marshall

March 29th
Hansard Link

Appropriation Bill No. 5, 2016-17 Second Reading

“...low of $13.6 billion in 2015-16, a reduction of a full $1 billion.

While lower and decreasing interest rates and interest costs on market debt over the past number of years has been positive, it also demonstrates the vulnerability of the government's bottom line should interest rates increase. Interest rates have risen in the U.S. and the expectation is that interest rates will rise in Canada, probably next year if not sooner, and this could have a major ne...”

Hon. Pierrette Ringuette

March 9th
Hansard Link

Criminal Code Bill to Amend—First Reading

“introduced Bill S-237, An Act to amend the Criminal Code (criminal interest rate).

(Bill read first time.)”

Hon. Wanda Thomas Bernard

March 8th
Hansard Link

International Women's Day Wednesday, March 8, 2017

“... colour, to see her face integrate
Canadian currency. Partisan
Of Justice, ponder her interest rate
From two cents to ten dollars, an increase of 50,000%.
Also Note, her Royal...”

Hon. Howard Wetston

February 8th
Hansard Link

Speech from the Throne Motion for Address in Reply—Debate Continued

“...l regulation. That being said, however, we were not immune. Low growth, higher unemployment and low interest rates have had a profound impact on the real economy.

The financial crisis revealed t...”


Active Bills

Bill S-237


An Act to amend the Criminal Code (criminal interest rate)
LEGISInfo Link

Bill Status: Introduction and First Reading in the Senate

“...Parliament, 64-65-66 Elizabeth II, 2015-2016-2017 SENATE OF CANADA BILL S-237 An Act to amend the Criminal Code (criminal interest rate) FIRST READING, March 9, 2017 THE HONOURABLE SENATOR RINGUETTE 421...”

“...arliament, 64-65-66 Elizabeth II, 2015-2016-2017 SENATE OF CANADA BILL S-237 An Act to amend the Criminal Code (criminal interest rate) Her Majesty, by and with the advice and consent of the Senate and House of Commons...”


Filed Regulations

Government of Grenada Remission Order

May 31, 2017 SI/2017-26
Registration SI/2017-26 May 31, 2017 FINANCIAL ADMINISTRATION ACT
Gazette Link

“...lic interest.

An estimated amount of up to C$980,000 is being sought to account for anticipated accrued interest and potential currency and interest rate fluctuations.

Background

In the aftermath of Hurricane Ivan, which struck Grenada on September 7, 2004, the Government of ...”


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